sSome federal education tax exemptions, deductions and credits are for those who are saving for college, while others help cover tuition and book costs while you are a student.
Once you have finished your academic career, there are tax benefits Which can help you pay off your student loan debt. However, the rules can be confusing, and there are situations when you cannot benefit from one tax relief if you have previously taken advantage of another. Therefore, it is important to be constantly aware of all the rules.
tax-deductible education expenses
Generally, tuition and required fees for enrollment or attendance at post-secondary educational institutions count as tuition and related expenses eligible for the Education Tax Credit (including colleges, universities, and trade schools).
Costs to be paid during the tax year must be for either an academic period that begins in the first three months of the next tax year or an academic period that begins in the current tax year.
One of two tax credits currently offered to those enrolled in college is: American Opportunity Tax Credit (AOTC), The only exception is that it can only be used for costs related to the first four years of undergraduate study. Therefore, if you have already claimed this credit for more than four years, you are no longer eligible.
For the purposes of the American Opportunity Credit, eligible expenses include tuition and other associated costs for the student’s college enrollment or attendance (e.g., required fees, books, supplies, and equipment). Insurance payments, medical costs (including student health fees), room and board, transportation costs, and other similar personal, living or family expenses are excluded from the calculation of expenses.
Lifetime Learning Credits (LLC) The second is a tax credit available to those actively enrolled in college. For a maximum credit of $2,000, you can use this credit to claim the first $10,000 of out-of-pocket expenses for college tuition, fees, and books. The Lifetime Learning Credit, unlike the American Opportunity Credit, is not limited to undergraduate educational costs or to students enrolled at least half-time.